The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Testing

  • Frank Kleibergen
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2062

Abstract

Hypothesis testing is the customary instrument for analysing the empirical validity of an economic theory. Hypothesis testing is thus an important tool for conducting statistical inference in economic models. In this article we show how an economic theory is tested in a statistical model. We begin with the discussion of the basic results on hypothesis testing and then focus on some recent developments that have improved testing in commonly used economic models such as the linear instrumental variables regression model. We use a real economic example to illustrate the main findings.

Keywords

Anderson–Rubin statistic Bootstrap Generalized method of moments Hypothesis testing: see testing Lagrange multipliers Least squares Likelihood ratios Limited information maximum likelihood Linear models Maximum likelihood Neymann–Pearson Lemma Price elasticity Probability Statistical inference Testing Two-stage least squares Wald statistics 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Frank Kleibergen
    • 1
  1. 1.